Source: China Market Monitor
After five years of evolvement, China’s air purifier sector gets on a path towards healthy development.
In March 2016, China’s new national standard for air purifiers kicked in, clarifying the development direction of this sector. In Jan 2017, Grades for PM Filtering Performance of Filter Air Purifiers, numbered T/CAQI 17-2016, was put in place. It set out a star rating system for air purifiers based on CADR, CCM, noise level and energy efficiency performance, raising the bar to a higher level. What’s more, Grades for Gaseous Pollutant Purifying Performance of Air Purifiers, an association standard, is expected to be released in Oct 2017, providing a grading system to access air purifiers’ cleaning performance of formaldehyde, TVOC and ozone. As standardization work goes specific, this sector is expected to be better regulated.
China’s air purifier sector enters a stage of healthy and steady development after a fast-growing period. According to estimated statistics from China Market Monitor, retail sales value of air purifiers is expected to grow by 33% year-on-year to surpass 19 billion RMB in 2017 and the retail sales volume 6.4 million units. In years to come, this sector is expected to maintain a year-on-year growth of more than 30%.
Reaching 688 in 2015, the number of air purifier brands on Chinese market is going down in recent two years, and it is estimated to fall to around 500 as of 2017. At offline channels, top three brands took more than 40% of the market share by retail sales value, a year-on-year growth of 10%.
Though the number of brands on the market is large, the technologies used are similar. Currently in the lead are activated carbon filter and HEPA filter, both with a penetration rate of more than 80%, and ionizer technology, with a penetration rate of some 40%. Penetration of other technologies is clearly lower than these three. Consumers are gaining knowledge of air purifiers and its related technologies. They hold a cautious attitude when it comes to products that cause secondary pollution. Currently, the combination of carbon filter and HEPA filter is most common on the market, and is seeing a clear rising trend.
Performance of local brands and online market
When air purifiers were just introduced to Chinese market, consumers flocked to foreign brands. Yet after years of development, their frenzy over foreign brand cools down. They start to get more rational in shopping. This trend can also be reflected by statistics monitored by China Market Monitor: in the first half of 2017, local air purifiers account for 1/3 of the market share by retail sales, clearly bigger than that of 2016.
As to online market, statistics from China Market Monitor suggested that, online retail sales value of air purifiers accounted for a market share of 44.2% for the first half of 2017, a record in the past five years. What’s more, online market saw a growth rate of nearly 25%, with the number of brands 3.5 times that of offline market.
A broad breakout of smog in China drew all eyes on air quality. Online survey conducted by Sina and Tencent showed that, 70% of respondents believed that indoor air quality needed to be purified. Those planning to buy an air purifier accounted for 27.6%. Only 2.5% respondents believed air purifiers were unnecessary.
When it came to reasons, the survey showed that “health hazards posed by bad air quality” and “kids (under 14 years old) in home” had the most votes of 49.6% and 44.1% respectively. “For better indoor air quality” is also a major consideration.
According to the survey, removing PM2.5 and formaldehyde were the most common needs of respondents, with votes of 88.1% and 46.8% respectively. Removing odor, VOCs, and second hand smoke had votes of 27.5%, 26.6% and 20.2% respectively.
These needs drive enterprises to adopt diversified marketing strategies. Products with large CADR and CCM were endorsed for strong purifying capacity. Those for formaldehyde removal were developed as a separate line. What’s more, more and more products use multi-mode switchover, smart sensor and APP remote control as selling points.
What comes with multiplying functions and improved cleaning performance is a rising manufacturing cost. According to China Market Monitor, for the first half of 2017, products with CADR over 400 m³/h took a bigger part of the market by retail sales value compared to 2016, accounting for 45% online and 2/3 offline. Average price of this category rose from 1600RMB in 2015 to 2000RMB in the first half of 2017 at online channels, and 3000RMB to 3500RMB at offline market. Sales performance showed that Chinese consumers’ acceptance to the price of air purifiers is improving, providing an enabling environment for enterprises.
Results of online survey showed that, of consumers who had air purifiers, 66.1% voted “quite satisfied”, while less than 5% “not quite satisfied”. Air purifiers on the market meet the needs of consumers in general, with some pain points to be solved too, for instance, noise level, indicator accuracy and operating cost.
A trend of dedicated outdoor air system
As indoor air quality draws an increased attention, dedicated outdoor air system (DOAS) comes into view. Establishing an indoor air system with a constant level of temperature, humidity, oxygen and cleanness is seen as the future of DOAS sector.
China’s air purifying industry enters a new era that features an integration of air purification system and ventilation system. China Market Monitor forecasted that, retail sales value of DOAS is expected to rise by 45% year-on-year in 2017, clearly higher than that of air purifiers. The combination of both is considered the perfect solution of indoor air quality, with air purifiers cleaning air with high efficiency and DOAS bringing in oxygen. Consumers’ price expectation for DOAS is higher than air purifiers. Amid China’s consumption upgrading trend, the combination of these two categories will enter more households.
As to channels consumers choose to buy air purifiers, up to 61.5% and 48.6% respondents selected “e-commerce operators” and “home appliance specialist chains” respectively, while department stores, super markets and brand franchises got votes of 20%-30%. As to DOAS, brand franchises, home furnishing stores, e-commerce operators and home appliance specialist chains got votes of 34.5%, 15.8%, 15.5% and 12.2%. Currently, the two categories have overlapped channels. A better positioning of manufacturers and dealers could create more advantages at terminals.
Air purifier ownership in China is 5 units per hundred household, far less than TVs, refrigerators, air conditioners and washing machines. The penetration of DOAS is lower. The market potential is to be unleashed.